"Those among the rich who are not, in the rigorous sense, damned, can understand poverty, because they are poor themselves, after a fashion— they cannot understand destitution. Capable of giving alms, perhaps, but incapable of stripping themselves bare, they will be moved, to the sound of beautiful music, at Jesus’s sufferings, but His Cross, the reality of His Cross, will horrify them." Léon Bloy

15 October 2015

A Closer Look At An Evolving Gold Chart Formation - Three Scenarios - Time

“Hubris calls for nemesis, and in one form or another it's going to get it, not as a punishment from outside, but as the completion of a pattern already started.”

Mary Midgley, Myths We Live By

As we have seen so many times, the nature of a chart formation is revealed at key moments when the chart action approaches a critical decision point, especially after a sustained move higher or lower.

In this case gold is struggling hard to break a multi-year bear market and form a successful bottom off the big 1080 support.

The gold bulls can hope for a retracement that finds support fairly quickly, and mounts another assault at making a higher high than the last failed breakout attempt that was stopped at 1230.

The gold bears are quite confident, to the point of overconfidence in their ability to smash the price lower with an avalanche of paper sells in quiet hours after two years of having their way with this market.

And all the while they have been setting themselves up for an eventual confrontation with the physical consequences of their actions. By now this should be a very familiar theme for a willful generation on any number of fronts.

A bullish interpretation can hold with declines even down to the bottom of a new bullish uptrending channel.

A break to the downside of 1120 negates this formation.

So in summary there are three general outcomes.

The first is a shallow retracement and a breakout that takes some greater momentum higher towards the 1300 level and makes the bottom with some decisiveness.

The second is a deeper retracement, with support found somewhere above 1120, with another assault mounted for a breakout higher from there.

And lastly, we must keep an open mind about a possible breakdown below 1120 setting up a retest of support, perhaps down towards 1080, or the establishment of a trading range.

I am not applying the normal probabilities to this evolving chart formation because of the obvious price manipulation that has been occurring in the paper gold markets, justified in the minds of the ringleaders no doubt by 'the currency war' and the flexing of monetary muscles.

In this environment gold and silver are being traded more like currency crosses, and less like commodities with a real basis of physical supply and demand underlying the transactions.

Perhaps the money masters may take their cue from the platinum coin, and declare a pile of sand to a thousand tonnes of bullion, of whatever variety they wish.

And you might be suprised at how many true believers will gratefully rise to praise this, drinking deeply of the madness of the will to power. If only all would believe, it would be true! But alas, they never do. There are always a stubborn few who fail to follow the dream into the abyss. And so the world divides into the enlightened and the spoilers, between us, and them.

To the truly relativistic mind, nothing is impossible if you apply enough conviction and power, at least in the musings of the modern and, at the lingering last, the high walled bunkers of the few. Their pipe bowls waft out familiar dreams, of freedom from restraints, and from their own mortality, and in the end perhaps, the last of their humanity.

All will be revealed with time. We cannot presume to know exactly when.

Le Propriétaire

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Need Little - Want Less - Love More

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

"In the Incarnation the whole human race recovers the dignity of the image of God. Thereafter, any attack even on the least of men is an attack on Christ, who took on the form of man, and in his own Person restored the image of God in all. Through our relationship with the Incarnation, we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our solidarity with all mankind." Dietrich Bonhoeffer

"A credibility trap is when the managerial functions of a society have been sufficiently compromised by corruption so that the leadership cannot reform, or even honestly address, the problems of that system without implicating a broad swath of the powerful, including themselves.

The moneyed interests and their aspirants tolerate the corruption because they have profited from it, and would like to continue to do so. Discipline is maintained by various forms of soft financial rewards and career and social coercion."

These are personal observations about the economy and the markets. In providing information, I hope this allows you to make your own decisions in an informed manner, even if it is from learning by my mistakes, which are many. As a standing policy I never provide individual investment advice to anyone. I will only occasionally disclose my personal positions for purposes of illustration. Understand that my own circumstances could differ greatly from your own, and therefore what is suitable for me may not be suitable for you. My comments are intended to be reflection on general macro financial and economic events and trends.